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Speech by Rt Hon Patricia Hewitt MP, Secretary of State for Health, 17 March 2006: Reform is the only route to safeguard the NHS

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8 February 2007

Braunstone Health Centre, Leicester.

Great changes generate great debate. No public institution, especially one as loved as Britain's National Health Service, can go through a radical programme of reform without plenty of noise, opposition, and turbulence.

But no institution can expect to survive and prosper unchanged in a world where change is happening further and faster than any time in human history.

For some, any attempt to change the NHS is a betrayal of its founding principles. For others, the need to change is proof that the NHS doesn't work, that we need a different kind of system. For others still, change is our ally, to be embraced and harnessed. One thing is clear: change never comes easily or quietly, but equally if a change is worth having, it is worth the fight.

I want to explain the Government's reform programme for the NHS, both the values that lie behind it and the vision of what we want to achieve, and set out some the policies which will take us there. I know this comes against a backdrop of uncertainty amongst some NHS staff, and a tough financial environment with constant media stories about deficits and cuts. But let us never forget how far we've come.

We should be proud as a country of the improvements in our NHS:

the lowest waiting lists since records began - what patients told us was their top priority

and surveys tell us that patients see the improvements in their local NHS, and their levels of satisfaction have gone up

And never forget: just ten years ago we saw regular NHS winter crises, with patients on trolleys in hospital corridors, people waiting all day in A&E, and buildings crumbling through lack of repairs. Compare that to the winter we've just come through - with minimum disruption to patient care and continuing falls in waiting lists.

As our reform programme gathers pace, we will go on seeing more improvements. But there will also be more turbulence, more headlines, more criticism. This is a pivotal year in the development of the NHS. The year we give patients more choice - and GPs and hospitals more freedom to innovate and improve. The year we solve some of the long-term problems. The year we change it for good.

We have to be bold if we are to achieve our goals. The great lesson from recent political history is that new Labour can never be bold enough when it comes to reform of public services. If we remain true to our values, keep in tune with people's rising expectations, and are bold in our ambitions, then we will secure public services - and public service values - for the next generation.

When progressive governments or parties in the past become conservative, with a small c - as we did in the late 1960s with trade union reform, or in the early 1980s with council house sales - we ally ourselves with the past, not the future. And crucially we create a space for our political opponents to colonise, forcing progressives out of the game.

Just think back to the row we had about Foundation Trusts. We were told by some that Foundation Trusts heralded the break up of the NHS. Today no-one would seriously suggest we turn back the clock.

But we have to be realistic about the challenges we face as we improve and reform the health service. As you might expect, an issue at the top of my in-tray is NHS finances, so let me deal with the issue of NHS overspends.

First the big picture: we have already doubled the amount of money going into the NHS; by 2008 we will have trebled it, bringing healthcare spending up to EU average of spending on healthcare, and correcting years of underspending. If the NHS were a country, it would be 33rd in the OECD list of countries with the biggest economies. It employs 1.3 million staff - the third largest employer in the world.

The new Strategic Health Authorities are likely to be about three times larger than they are now, each with a budget of approximately £7 billion a year, and looking after the health of around five million people.

A single Primary Care Trust will have a budget of roughly half a billion pounds - comparable with a major company.

Our NHS is a huge, complex enterprise.

So it is a huge credit to the staff and management of the NHS that they achieved major service improvement and financial balance in each of the four years before last year. That is the equivalent of landing a jumbo jet on a postage stamp over and over again.

But last year, a minority of NHS organisations overspent their budgets to an extent that brought the whole NHS into deficit - a net overspend of £256 million, or 0.4% of the total NHS budget. This was not the first time the NHS has had a deficit. In the last year of the previous government in 1996/7, the NHS overspend amounted to 1.4% of a £33 billion budget: double the overspend on half the investment.

This year the projected deficit across the entire NHS is still less than 1% of NHS funding.

'Cash crisis' makes for a good newspaper headline, but it is hardly an accurate description of today's NHS. If you earn £20,000 a year, that's the same as being less than £200 in the red at the end of the year.

But why are there deficits at all, when there are record amounts of money going into the NHS?

The fact is that our reforms are exposing problems that have existed for many years in some places. As we put in record amounts of taxpayers' money, we have also demanded much greater financial transparency from the NHS. No more short-term fixes to long-term problems. No more shifting money from capital to cover up over-spending. No longer the assumption from over-spending areas - often in the best-off parts of the country - that they will be bailed out by under-spending areas - usually in the worst-off communities.

It's a perverse incentive. It's unfair. And for the first time in the history of the NHS, we are tackling it.

Our reforms aren't the cause of the problem. They're part of the solution. But

We are only half-way through our NHS improvement plan. And in the minority of places with serious financial problems not enough has been done yet to adopt the best practice of our most effective hospitals and health communities.

We cannot allow NHS organisations to go on over-spending. It can't continue for three main reasons: because deficits pile up year on year, making it harder each year to reach a balance; because it is unfair on patients in the majority of the country which is not in deficit; and, above all, because there is a very strong link between the best financial management and the best standards of patient care.

So there will be a programme of major action to sort it out.

Sending turnaround teams in to help the organisations with the biggest problems. KPMG findings are absolutely clear that good basic financial discipline is needed. Because other hospitals have overcome these problems in the past, we know it can be done - but it needs extra management support and very close working between front-line staff and management.

Spreading best practice even faster. We know that many places have cut emergency admissions by putting more staff in the community - like the PCT in Dudley that is looking after patients better, has fewer acute beds in the hospital and is under-spending on its hospital budget. In our new White Paper, Our Health, Our Care, Our Say, we set out the strategy: more health promotion and prevention; better support in the community for people with long-term conditions; more personal, flexible and local services. That's how we get better care for people with better value for money.

Asking Primary Care Trusts in each region to help each other. We have to get the NHS back into financial balance - there is no pot of gold hidden somewhere else. So Strategic Health Authorities within each region are asking areas that have stayed within their budgets to help. But unlike the past, this will be on condition that the over-spenders put their own house in order.

There will be some difficult decisions to be made over the next year. But the NHS budget will continue to grow by record amounts. The waiting lists will continue to come down. Treatment will go on improving - particularly for cancer patients whom we are making a particular priority over the next year. Restoring the NHS to financial balance will be tough. But I am confident we can do it. And I know that I will be judged on it.

I've spoken about two of the big things we have to do over the next year: restoring financial balance while we continue to improve patient care. But over the next year, we will also embed the long-term reforms of the NHS. Reforms that are designed to safeguard the long-term future of the NHS. True to its founding values - available to all, funded largely by taxation, free at the point of use - but also responding to the growing expectations of modern society.

At the heart of our vision is a patient-led NHS which:

safeguards your health, instead of waiting until you are sick;

offers you personal care, not one-size-fits-all;

provides services as conveniently and close to home as possible;

all based on need, not ability to pay

Here at the new Braunstone Health Centre we see what can be achieved when the health service, the community and local government work together. Here, in a community neglected for decades, we see doctors, nurses, dentists, mental health counsellors and social care services all working together - but also self-help groups such as Calorie Killers. Different agencies, backed by government investment, joining up to secure better health for those who need it most.

Just listen to Freda Nethercot, 72, a local resident: 'Having this new centre on our doorstep will make a world of difference. Before, if we wanted to see a doctor or dentist, we had to travel half way across the city. This was a real problem for a lot of people and I know many have not seen a doctor for years.'

For the last five years, we have relied heavily upon national targets to improve the NHS. But top-down management - although it has been essential to cutting waiting lists in the short term - is not a long-term solution.

Instead, we need to ensure that, throughout the NHS, there are the right incentives for continuous improvement, innovation and better value for money.

That is what I mean by moving from a provider-led NHS to a patient-led NHS.

There are four inter-linked strands to our reforms which work together to create the self-improving NHS we seek:

more choice and a stronger voice for patients

more diverse providers, with more freedom to innovate and challenge poor performance

money following the patients, rewarding the best and most efficient and giving the rest a real incentive to improve

a framework of regulation and decision-making to guarantee fairness, equity and value for money.

Let me just highlight one vital aspect: more choice for patients.

In the new NHS, choice will mean power for patients, and create the incentives for the NHS to adapt their services to what people want and need.

Choice is a progressive value - putting us on the side of the people. The 22nd British Social Attitudes Survey showed that 65% wanted a choice of treatment, 63% a choice of hospital, and 53% a choice of appointment time.

Significantly, choice is more important to people lower down the social scale. 70% of those earning less than £10,000 a year wanted more choice compared to 59% of those earning more than £50,000 a year. 69% of people with no educational qualification wanted choice compared to 56% with a degree. A report by the Audit Commission in 2004 revealed that the people who wanted the most choice were the least privileged, and people from the north and the midlands.

When we introduced choice of supplier of routine operations, initially for heart patients and then for other treatments like cataracts, waiting lists tumbled. It was not just because of the obvious reason - the increase of capacity. It was also because of the challenge that choice meant to the existing system. And there is no evidence - as our critics claim - that it is the middle class who are the principal beneficiaries. We found with the pilot experiments on choice that the less well off took up the choices offered as frequently as the better off.

I can also announce today that we are approaching an important milestone in the delivery of real choice across the NHS. The Choose and Book system - the new computer system that is being rolled out across the NHS to help patients make choices - is approaching its 250,000 booking. We are currently rolling out Choose and Book to every GP practice. There have been some challenges in delivering Choose and Book, but the NHS is now making more than 16,000 bookings a week, compared to 5,000 a week during December, with more than 3,700 GP practices using the system. At this rate, with bookings increasing by the day, we anticipate that by August we will have had one million bookings. This is real progress.

I believe that we will look back at an NHS which gave you a choice of just one hospital for your operation, (a system which we ended in January), with the same bemusement as we remember councils which told their tenants which colour to paint their front doors, or the early Ford cars which 'could be any colour you want as long as it's black.'

As our reforms progress, we want more choices for patients. We are pledged to banish long waiting lists from the NHS, with a target of no-one waiting more than 18 weeks from GP referral to treatment. Choice will play a major role in delivering that pledge to patients.

We are introducing a choice of diagnostic scans for patients.

It is unacceptable that there are hidden waiting lists in the system, which include waits for diagnostic tests. We have to eradicate them if we are to meet our 18-week target. It is also unacceptable that patients can get a private scan within days but have to wait for an NHS scan.

From 30th November patients waiting for an MRI or CT scan without an appointment within 26 weeks have been offered an alternative choice of provider, within 26 weeks. From the end of April this year, patients without an appointment for a scan within 20 weeks will be offered a scan elsewhere within 20 weeks. That includes ultrasound, MRI, CT and other scans.

Since November, the choice of scan has meant faster diagnostic tests for over 40,000 patients. Already choice of scan has focussed the efforts of existing NHS organisations to reduce waiting times:

In Blackpool, routine MRI waiting times have dropped from 52 weeks in July 2005 to 16 weeks now.

This is just the beginning of the choice revolution in the NHS. It is popular. It improves the patients' experience. And it works.

In short - patient choice saves patients' lives.

As we reform the NHS, get a grip on the finances, and strive to meet our targets for lower waiting lists, faster cancer care, shorter waits in A&E, we are strengthening patient care every step of the way.

The more I meet the people who are modernising local health services, hear stories about improvements for patients, and look at the evidence, the more convinced I am that our programme of investment and reform is the right thing to do.

We have a clear choice for the NHS - leave it alone, and watch it decay; or hold steady with the reforms and watch it prosper.